Sprint spends $200M in Q3 to support increased data traffic on CDMA network
Sprint Nextel (NYSE:S) spent an additional $200 million to prop up its existing 3G CDMA network while it works to transition customers onto its newer LTE network, the carrier disclosed in a recent government filing.
"We are also experiencing increased data usage driven by more subscribers on the Sprint platform and a continuing shift in our subscriber base to smartphones, which has required additional capital expenditures of legacy 3G Sprint platform equipment (legacy equipment)," Sprint wrote in a recent filing with the Securities and Exchange Commission. "Furthermore, based on current estimates of increased data usage, we expect additional capital expenditures of legacy equipment until our network modernization is substantially complete."
Sprint spokesman Scott Sloat explained that the carrier is trying to bolster capacity on its CDMA network as it works to deploy its Network Vision network modernization project, which includes launching LTE network technology.
"This is driven by the subscriber increases we have had on the Sprint platform (for example last quarter it was more than 900K net adds) and the increasing uptake on smartphones. So it is really more accurate to say it is to accommodate more users on our network," Sloat wrote in response to questions from FierceWireless. "This spending is included in our capital expenditures guidance for the year which we lowered to less than $6 billion in 2012 (from $6 billion), excluding capitalized interest in our recent earnings call."
The news comes as little surprise. Sprint has been working for years to increase the number of its CDMA subscribers, an effort that includes moving Sprint's iDEN subscribers onto its CDMA network. Sprint plans to shut down its iDEN network next year. Further, Sprint continues to offer unlimited data plans to its smartphone users, thereby encouraging them to make use of network-heavy applications like streaming video.
Sprint is in the process of rolling out LTE network technology, which is far more spectrally efficient than its existing CDMA network. The carrier is working to encourage subscribers to upgrade their 3G phones with LTE devices, and has already sold more than 1 million LTE phones in this effort. Sprint plans to cover 150 million POPs with LTE by year-end and 250 million POPs by the end of next year.
But Sprint isn't alone in needing to bolster its legacy network while rolling out a more advanced network. MetroPCS (NYSE:PCS) last year announced it would deploy EV-DO data service in around 20 percent of its cell sites to augment its CDMA 1X data service. MetroPCS too is working to migrate its CDMA customers onto its LTE network.
- see this Sprint SEC filing